Opportunities Grow for Veteran-Owned Businesses

National movement puts veteran-owned firms on a par with minority- and women-owned firms

Wading through swamps and running up mountains taught Patrick McCormack more than how to survive punishing conditions without much food or sleep. His grueling Army Ranger training, along with several deployments to Iraq and Afghanistan, taught the Ellicott City native important business lessons as well.

“It takes a lot of discipline to run your own company,” said McCormack, 29, who owns custom drum maker MapleWorks Drum Co. in Millersville. “You don’t make it through [Ranger] school unless you have the drive and motivation to do what you have to when someone is not watching over you.”

McCormack, a member of the elite Ranger corps from 2000 to 2007, recently began promoting his veteran-owner status in online business directories and on the company’s website.

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“It’s an angle we honestly hadn’t thought about pushing before,” he said, adding that he began using his veteran’s status as a marketing tool within the past year. “But musicians who are former military appreciate it, and [other] customers know [the work] is going to get done and get done right, with attention to detail.”

Thanks to a growing national movement to put veteran-owned firms on a par with minority- and women-owned businesses when it comes to competing for contracts, opportunities for veterans are growing in the public and private sectors. Increasingly, corporations and state and local governments — including Maryland — have set procurement goals or mandates for working with firms owned by veterans.

Starting next year, Maryland agencies will aim to award 0.5 percent of their procurement contracts — based on the contracts’ value — to small businesses owned and operated by veterans. The General Assembly last year approved legislation establishing the goal.

“We as a state and as a country need to take care of them because they took care of us,” said Jerry Boden, chief of staff for the Maryland Department of Veterans Affairs.

Statistics released this spring by the Census Bureau offered the first-ever snapshot of veteran-owned business ownership in the United States.

The data showed the country had 2.4 million veteran-owned firms, accounting for 9 percent of all businesses, with 5.8 million employees and $1.2 trillion in sales.

Those figures, which came from the 2007 Survey of Business Owners, measured companies with veteran ownership of at least 51 percent. An additional 1.2 million businesses were equally owned by veterans and nonveterans, the data showed.

Maryland had more than 54,000 veteran-owned businesses, or nearly 10 percent of all businesses in the state.

Experts say it is hard to know whether the number of veteran-owned firms is increasing. The previous business owners survey, done by the Census Bureau in 2002, showed 2 million majority-owned veteran firms — but only firms that responded to the survey were counted. The more recent survey, on the other hand, estimated the total number of veteran-owned firms.

Matthew Pavelek, spokesman for the National Veteran-Owned Business Association, acknowledged the difficulty of gauging the growth of veteran-owned businesses, given the two different sets of data. But he said one thing can be stated with certainty: “There definitely has been an increase in opportunities for veteran-owned businesses to want to identify themselves as veteran-owned businesses.”

The number of Fortune 500 firms that have set goals for working with veteran-owned businesses — or firms owned by veterans disabled while in the service — has jumped 50 percent in the past four years, since the business association began tracking those companies, Pavelek said. Some 156 Fortune 500 firms have specific goals related to veteran-owned suppliers or businesses, he said.

The number of states that have passed laws about doing business with veteran-owned businesses has increased from 12 to 17 since 2008, and more have legislation pending.

In addition to Maryland’s new procurement goal, the state’s no-interest loan program, available to veteran business owners since 2008, dispensed $300,000 in each of the last two fiscal years, with loans ranging from $1,000 to $50,000, said Boden of the Maryland Department of Veterans Affairs.

The movement to offer preferred status to veteran-owned firms has been growing since the federal government set a 3 percent goal in 1999 for doing business with small firms owned by service-disabled veterans.

Before that, Pavelek said, “there was no clear definition or recognition that a person who served in the military was a diverse small-business class.”

“But if corporations are going to give special incentives to any type of group, veterans have at least earned the right,” he said.

Another reason why it’s difficult to pin down precise numbers for veteran-owned businesses is that a lot of firms don’t identify themselves as such, said Phil Dyer, a West Point graduate and chief executive officer of the financial planning firm Dyer Financial Advisory in Towson.

“A lot of that came from the Vietnam experience, when folks who were Vietnam vets started businesses and turned their backs on their military experience,” he said — pointing out that the mood in the United States at the time was profoundly anti-war, and often anti-vet.

Dyer, an active-duty Army officer for 51/2 years in Germany and the U.S., says times have changed.

“The general mood in the country right now is positively disposed toward veterans in general, and that carries over to veteran business owners,” he said.

Vernon Williams, a Columbia-based consultant and president of the Vernon Williams Co. LLC, served in the Army from 1964 to 1967. He says he is hoping to use his veteran status to attract business but is not sure the pitch will work.

“I’ve registered on various websites as a veteran-owned business, but I don’t know I can say that’s opened some doors for me,” said Williams, who runs workshops on saving money as well as a comparison-shopping website.

Even if it’s not bringing them business directly, some vets say their military experience has influenced the way they run a company.

That’s been the case for Alan Klug, 75. The third-generation president of Klug Uniforms in Baltimore, a supplier to restaurants, hotels and hospitals, graduated from Mount St. Mary’s University in Emmitsburg with an accounting degree before being drafted in 1958.

In Korea, the Army specialist served in a “fire direction control” unit before moving to a special division designed to boost morale. He was an assistant coach of what ended up being the championship football team that represented the Army in Korea. Before coming home, he also helped put together a baseball team with players from minor league teams back home.

“The biggest thing it did was give me the confidence to step forward,” Klug said. “In accounting, you take the quiet role. However, in running a company you have to be dynamic, you have to be innovative, you have to be imaginative, and all these things I picked up while working for [military leaders] in Korea. It’s either produce or catch heck.”

Klug says he hadn’t promoted his veteran background until recently, when he began adding it to his emails and direct mailings and listing his firm in veteran business directories.

“There’s a state of awareness now that people that served the country are special people,” he said.

Today’s returning veterans have an especially great interest in starting their own businesses, according to statistics from the Small Business Administration. The SBA, which says veterans age 35 and younger make up the largest age demographic of veteran business owners, has found that about a quarter of returning veterans are interested in entrepreneurship.

Iraq war veteran Christopher Gonzalez, who served in the Marine Corps from 1999 to 2007, was a scout in a reconnaissance platoon, moving ahead of his outfit to look for danger. He ultimately oversaw a group of 50.

In 2008 he began doing project management contracting for the government.

“You go from a person that has no responsibility and are groomed to be a small-team leader, then in charge of larger [groups]. You’re taught to think independently and work independently, but the work is for the better good of a team,” Gonzalez, 32, said. “You’re taught if you have an opportunity, you take it, and that’s what I did.”

Running A-G Associates in Annapolis with his business partner, Peg Anthony, Gonzalez has relied on his Marine Corps training and finds parallels between his military and business experiences. The Annapolis company offers project management and human resources consulting and training as a government subcontractor.

“I was new to the government sector but understood the way the military worked and [Anthony] had a lot of experience with defense agencies,” Gonzalez, A-G’s president, said by phone from Afghanistan, where is he is currently deployed with the Marine Corps reserves. “The concepts of the military are the same: discipline to get the work done.”

McCormack, owner of MapleWorks, also credits his military background with giving him the discipline to run a small business. After leaving the Army in 2007, he began running the company he’d bought two years earlier. He has broadened the company’s name recognition outside Maryland, built up the website to become the firm’s main selling tool and counts drummers for national recording acts among his customers. He makes about 10 drum kits and up to 20 snare drums a month at a workshop behind his house in Millersville.

He has found that customers often appreciate the fact that the business is veteran-run. His two employees are Iraq veterans.

“There’s a good amount of custom drum companies out there, and [being veteran-run] sets us apart,” McCormack said.

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